S.B. No. 1350

	AN ACT
	relating to the creation and operations of a health care provider
	participation program by a certain hospital district.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Subtitle D, Title 4, Health and Safety Code, is
	amended by adding Chapter 298E to read as follows:
	CHAPTER 298E.  HEALTH CARE PROVIDER PARTICIPATION PROGRAM IN
	CERTAIN HOSPITAL DISTRICTS
	SUBCHAPTER A. GENERAL PROVISIONS
	Sec. 298E.001.  DEFINITIONS. In this chapter:
	(1)  "Board" means the board of hospital managers of a
	district.
	(2)  "District" means a hospital district to which this
	chapter applies.
	(3)  "Institutional health care provider" means a
	hospital that is not owned and operated by a federal, state, or
	local government and provides inpatient hospital services.
	(4)  "Paying provider" means an institutional health
	care provider required to make a mandatory payment under this
	chapter.
	(5)  "Program" means a health care provider
	participation program authorized by this chapter.
	Sec. 298E.002.  APPLICABILITY.  This chapter applies only to
	a hospital district created in a county with a population of more
	than 800,000 that was not included in the boundaries of a hospital
	district before September 1, 2003.
	Sec. 298E.003.  HEALTH CARE PROVIDER PARTICIPATION PROGRAM;
	PARTICIPATION IN PROGRAM. The board of a district may authorize the
	district to participate in a health care provider participation
	program on the affirmative vote of a majority of the board, subject
	to the provisions of this chapter.
	Sec. 298E.004.  EXPIRATION. (a)  Subject to Section
	298E.153(d), the authority of a district to administer and operate
	a program under this chapter expires December 31, 2023.
	(b)  This chapter expires December 31, 2023.
	SUBCHAPTER B. POWERS AND DUTIES OF BOARD
	Sec. 298E.051.  LIMITATION ON AUTHORITY TO REQUIRE MANDATORY
	PAYMENT. The board of a district may require a mandatory payment
	authorized under this chapter by an institutional health care
	provider located in the district only in the manner provided by this
	chapter.
	Sec. 298E.052.  RULES AND PROCEDURES. The board of a
	district may adopt rules relating to the administration of the
	program, including collection of the mandatory payments,
	expenditures, audits, and any other administrative aspects of the
	program.
	Sec. 298E.053.  INSTITUTIONAL HEALTH CARE PROVIDER
	REPORTING. If the board of a district authorizes the district to
	participate in a program under this chapter, the board shall
	require each institutional health care provider located in the
	district to submit to the district a copy of any financial and
	utilization data required by and reported to the Department of
	State Health Services under Sections 311.032 and 311.033 and any
	rules adopted by the executive commissioner of the Health and Human
	Services Commission to implement those sections.
	SUBCHAPTER C. GENERAL FINANCIAL PROVISIONS
	Sec. 298E.101.  HEARING. (a)  In each year that the board of
	a district authorizes a program under this chapter, the board shall
	hold a public hearing on the amounts of any mandatory payments that
	the board intends to require during the year and how the revenue
	derived from those payments is to be spent.
	(b)  Not later than the fifth day before the date of the
	hearing required under Subsection (a), the board shall publish
	notice of the hearing in a newspaper of general circulation in the
	district and provide written notice of the hearing to each
	institutional health care provider located in the district.
	Sec. 298E.102.  DEPOSITORY. (a)  If the board of a district
	requires a mandatory payment authorized under this chapter, the
	board shall designate one or more banks as a depository for the
	district's local provider participation fund.
	(b)  All funds collected by a district under this chapter
	shall be secured in the manner provided for securing other funds of
	the district.
	Sec. 298E.103.  LOCAL PROVIDER PARTICIPATION FUND;
	AUTHORIZED USES OF MONEY. (a)  If a district requires a mandatory
	payment authorized under this chapter, the district shall create a
	local provider participation fund.
	(b)  A district's local provider participation fund consists
	of:
	(1)  all revenue received by the district attributable
	to mandatory payments authorized under this chapter;
	(2)  money received from the Health and Human Services
	Commission as a refund of an intergovernmental transfer under the
	program, provided that the intergovernmental transfer does not
	receive a federal matching payment; and
	(3)  the earnings of the fund.
	(c)  Money deposited to the local provider participation
	fund of a district may be used only to:
	(1)  fund intergovernmental transfers from the
	district to the state to provide the nonfederal share of Medicaid
	payments for:
	(A)  uncompensated care payments to hospitals in
	the Medicaid managed care service area in which the district is
	located, if those payments are authorized under the Texas
	Healthcare Transformation and Quality Improvement Program waiver
	issued under Section 1115 of the federal Social Security Act (42
	U.S.C. Section 1315);
	(B)  uniform rate enhancements for hospitals in
	the Medicaid managed care service area in which the district is
	located;
	(C)  payments available under another waiver
	program authorizing payments that are substantially similar to
	Medicaid payments to hospitals described by Paragraph (A) or (B);
	or
	(D)  any reimbursement to hospitals for which
	federal matching funds are available;
	(2)  subject to Section 298E.151(d), pay the
	administrative expenses of the district in administering the
	program, including collateralization of deposits;
	(3)  refund a mandatory payment collected in error from
	a paying provider;
	(4)  refund to paying providers a proportionate share
	of the money that the district:
	(A)  receives from the Health and Human Services
	Commission that is not used to fund the nonfederal share of Medicaid
	supplemental payment program payments; or
	(B)  determines cannot be used to fund the
	nonfederal share of Medicaid supplemental payment program
	payments;
	(5)  transfer funds to the Health and Human Services
	Commission if the district is legally required to transfer the
	funds to address a disallowance of federal matching funds with
	respect to programs for which the district made intergovernmental
	transfers described by Subdivision (1); and
	(6)  reimburse the district if the district is required
	by the rules governing the uniform rate enhancement program
	described by Subdivision (1)(B) to incur an expense or forego
	Medicaid reimbursements from the state because the balance of the
	local provider participation fund is not sufficient to fund that
	rate enhancement program.
	(d)  Money in the local provider participation fund of a
	district may not be commingled with other district funds.
	(e)  Notwithstanding any other provision of this chapter,
	with respect to an intergovernmental transfer of funds described by
	Subsection (c)(1) made by a district, any funds received by the
	state, district, or other entity as a result of that transfer may
	not be used by the state, district, or any other entity to:
	(1)  expand Medicaid eligibility under the Patient
	Protection and Affordable Care Act (Pub. L. No. 111-148) as amended
	by the Health Care and Education Reconciliation Act of 2010 (Pub. L.
	No. 111-152); or
	(2)  fund the nonfederal share of payments to hospitals
	available through the Medicaid disproportionate share hospital
	program or the delivery system reform incentive payment program.
	SUBCHAPTER D. MANDATORY PAYMENTS
	Sec. 298E.151.  MANDATORY PAYMENTS BASED ON PAYING PROVIDER
	NET PATIENT REVENUE. (a)  Except as provided by Subsection (e), if
	the board of a district authorizes a health care provider
	participation program under this chapter, the board may require an
	annual mandatory payment to be assessed on the net patient revenue
	of each institutional health care provider located in the district.
	The board may provide for the mandatory payment to be assessed
	quarterly. In the first year in which the mandatory payment is
	required, the mandatory payment is assessed on the net patient
	revenue of an institutional health care provider as reported in the
	provider's Medicare cost report submitted for the most recent
	fiscal year for which the provider submitted a Medicare cost
	report. If the mandatory payment is required, the district shall
	update the amount of the mandatory payment on an annual basis.
	(b)  The amount of a mandatory payment assessed under this
	chapter by the board of a district must be uniformly proportionate
	with the amount of net patient revenue generated by each paying
	provider in the district as permitted under federal law. A health
	care provider participation program authorized under this chapter
	may not hold harmless any institutional health care provider
	located in the district, as required under 42 U.S.C. Section
	1396b(w).
	(c)  If the board of a district requires a mandatory payment
	authorized under this chapter, the board shall set the amount of the
	mandatory payment, subject to the limitations of this chapter. The
	aggregate amount of the mandatory payments required of all paying
	providers in the district may not exceed six percent of the
	aggregate net patient revenue from hospital services provided by
	all paying providers in the district.
	(d)  Subject to Subsection (c), if the board of a district
	requires a mandatory payment authorized under this chapter, the
	board shall set the mandatory payments in amounts that in the
	aggregate will generate sufficient revenue to cover the
	administrative expenses of the district for activities under this
	chapter and to fund an intergovernmental transfer described by
	Section 298E.103(c)(1). The annual amount of revenue from
	mandatory payments that shall be paid for administrative expenses
	by the district is $150,000, plus the cost of collateralization of
	deposits, regardless of actual expenses.
	(e)  A paying provider may not add a mandatory payment
	required under this section as a surcharge to a patient.
	(f)  A mandatory payment assessed under this chapter is not a
	tax for hospital purposes for purposes of Section 4, Article IX,
	Texas Constitution, or Section 281.045 of this code.
	Sec. 298E.152.  ASSESSMENT AND COLLECTION OF MANDATORY
	PAYMENTS. (a)  A district may designate an official of the
	district or contract with another person to assess and collect the
	mandatory payments authorized under this chapter.
	(b)  The person charged by the district with the assessment
	and collection of mandatory payments shall charge and deduct from
	the mandatory payments collected for the district a collection fee
	in an amount not to exceed the person's usual and customary charges
	for like services.
	(c)  If the person charged with the assessment and collection
	of mandatory payments is an official of the district, any revenue
	from a collection fee charged under Subsection (b) shall be
	deposited in the district general fund and, if appropriate, shall
	be reported as fees of the district.
	Sec. 298E.153.  PURPOSE; CORRECTION OF INVALID PROVISION OR
	PROCEDURE; LIMITATION OF AUTHORITY. (a)  The purpose of this
	chapter is to authorize a district to establish a program to enable
	the district to collect mandatory payments from institutional
	health care providers to fund the nonfederal share of a Medicaid
	supplemental payment program or the Medicaid managed care rate
	enhancements for hospitals to support the provision of health care
	by institutional health care providers located in the district to
	district residents in need of health care.
	(b)  This chapter does not authorize a district to collect
	mandatory payments for the purpose of raising general revenue or
	any amount in excess of the amount reasonably necessary to fund the
	nonfederal share of a Medicaid supplemental payment program or
	Medicaid managed care rate enhancements for hospitals and to cover
	the administrative expenses of the district associated with
	activities under this chapter.
	(c)  To the extent any provision or procedure under this
	chapter causes a mandatory payment authorized under this chapter to
	be ineligible for federal matching funds, the board of a district
	may provide by rule for an alternative provision or procedure that
	conforms to the requirements of the federal Centers for Medicare
	and Medicaid Services. A rule adopted under this section may not
	create, impose, or materially expand the legal or financial
	liability or responsibility of the district or an institutional
	health care provider in the district beyond the provisions of this
	chapter. This section does not require the board to adopt a rule.
	(d)  A district may only assess and collect a mandatory
	payment authorized under this chapter if a waiver program, uniform
	rate enhancement, or reimbursement described by Section
	298E.103(c)(1) is available to the district.
	SECTION 2.  As soon as practicable after the expiration of
	the authority of a hospital district to administer and operate a
	health care provider participation program under Chapter 298E,
	Health and Safety Code, as added by this Act, the board of hospital
	managers of the hospital district shall transfer to each
	institutional health care provider in the district that provider's
	proportionate share of any remaining funds in any local provider
	participation fund created by the district under Section 298E.103,
	Health and Safety Code, as added by this Act.
	SECTION 3.  If before implementing any provision of this Act
	a state agency determines that a waiver or authorization from a
	federal agency is necessary for implementation of that provision,
	the agency affected by the provision shall request the waiver or
	authorization and may delay implementing that provision until the
	waiver or authorization is granted.
	SECTION 4.  This Act takes effect immediately if it receives
	a vote of two-thirds of all the members elected to each house, as
	provided by Section 39, Article III, Texas Constitution. If this
	Act does not receive the vote necessary for immediate effect, this
	Act takes effect September 1, 2019.
	______________________________	______________________________
	President of the Senate	Speaker of the House
	I hereby certify that S.B. No. 1350 passed the Senate on
	April 25, 2019, by the following vote:  Yeas 30, Nays 0.
	______________________________
	Secretary of the Senate
	I hereby certify that S.B. No. 1350 passed the House on
	May 14, 2019, by the following vote:  Yeas 124, Nays 17, two
	present not voting.
	______________________________
	Chief Clerk of the House
	Approved:
	______________________________
	Date
	______________________________
	Governor